D.C. Circuit to Rehear Case on Conflict Minerals Rule (with Woody Comment)

On November 18, 2014, the D.C. Circuit granted the petitions of the SEC and Amnesty International for a panel rehearing of the court's ruling to overturn parts of the SEC's rule on conflict minerals. The per curiam order deferred the pending petitions for rehearing en banc, and directed the parties to file supplemental briefs addressing the following specific questions:

• What effect, if any, does the court's ruling in American Meat Institute v. U.S. Department of Agriculture, 760 F.3d 18 (D.C. Cir. 2014) (en banc), have on the case's First Amendment issue regarding the conflict mineral disclosure requirement?
• What is the meaning of the phrase "purely factual and uncontroversial information," as used in Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985), and American Meat Institute v. U.S. Department of Agriculture, 760 F.3d 18 (D.C. Cir. 2014) (en banc)?
• Is the determination of what is "uncontroversial information" a question of fact?

In April of 2014, the D.C. Circuit struck down a portion of the conflicts mineral rule, holding that the rule violated First Amendment speech rights by compelling companies to label their products "not conflict free" or "conflict free." However, in its subsequent decision in American Meat, the court held, en banc, that a "rational basis" review should be applied to First Amendment challenges regarding the commercial disclosure of "purely factual and uncontroversial" commercial information. Originally, this standard was set forth by the Supreme Court in Zauderer, yet it was limited in 2012 to apply only to cases involving consumer deception. See R.J. Reynolds Tobacco Co. v. FDA, 696 F.3d 1205 (D.C. Cir. 2012). In American Meat, the D.C. Circuit overruled those cases that relied on a narrow reading of Zauderer, including Nat'l Ass'n of Mfrs. v. SEC (the court's conflict minerals decision), and clarified that rational basis review applies to disclosure mandates aimed at addressing problems other than deception.

Woody Comment: This decision is consistent with the holding in American Meat, which stated specifically that the court's decision regarding the conflict minerals rule relied on an overly narrow reading of Zauderer. However, there is still a live issue regarding whether the compelled speech in the conflict minerals rule is "purely factual and uncontroversial information." In its brief for rehearing, Amnesty International argued that Zauderer's use of the phrase "purely factual and uncontroversial information" was merely descriptive and not meant as a threshold requirement. The brief argued further that even if the phrase does comprise a threshold, the conflict minerals information meets that threshold because it is based on the objective definitions set forth in the statute. On the other hand, the National Association of Manufacturers ("NAM") likely will reiterate its contention that the compelled information is highly controversial because the statutory definitions of "conflict-free" and "not conflict free" are "pregnant with political and ideological conclusions." In addition, NAM will argue that the information may not even be factual given a recent Department of Commerce report, which concluded that the department's staff could not determine which minerals-processing facilities were financing conflict in the Democratic Republic of Congo.

See: Order.See also: Conflict Minerals Specialty Page (available to Cabinet subscribers only).Related news: D.C. Circuit Decision Clarifies Scrutiny Level for First Amendment Challenges to Disclosure Requirements and Affects Conflict Minerals Rule (with Woody Comment and Lofchie YouTube Selection) (August 1, 2014); SEC Issues Partial Stay of Conflict Minerals Rule (with Woody Comment) (May 2, 2014); D.C. Circuit Strikes Down Part of SEC's Conflict Minerals Rule (with Woody Comment) (April 14, 2014).